Former NY power broker Raymond Harding pleads guilty in pension fund corruption scandal

Former NY power broker guilty in pension probe

NEW YORK — A political power broker and an investment executive who advised government officials in several states have pleaded guilty to securities fraud in connection with a “pay-to-play” scandal at New York’s public pension fund.

Raymond Harding, the one-time head of New York’s now-defunct Liberal Party, entered his guilty plea Tuesday in Manhattan. He had been charged in April with accepting more than $800,000 in kickbacks from investment companies doing business with the pension fund.

In court, Harding admitted that aides to former state comptroller Alan Hevesi had arranged for him to get the money as a “reward” for past political favors. Among them: helping a state assemblyman leave the legislature for a private-sector job so Hevesi’s son could run for the vacant seat.

Attorney General Andrew Cuomo also announced a guilty plea by Saul Meyer, co-founder of the Dallas investment advisory firm Aldus Equity.

Aldus had been hired by public pension funds in several states to help decide how to invest billions of dollars in retirement system money, but Cuomo said Meyer corrupted his role as a “gatekeeper” by allowing politics and patronage to infiltrate the business.

Among other things, prosecutors said Meyer arranged to have Aldus pay $300,000 in sham fees to one of Hevesi’s political consultants, Hank Morris, so the firm could get a $175 million pension fund deal.

Meyer’s guilty plea also covered fraud in investment transactions relating to government funds in New Mexico, where Aldus was an adviser to the New Mexico State Investment Council and the New Mexico Educational Retirement Board.

In a statement read in court, Meyer said that on “numerous occasions” he had succumbed to pressure from people with clout in New Mexico politics who wanted Aldus to approve certain investments.

“I did this knowing that these politically connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico,” he said.

Cuomo declined to say who those people were and referred questions to federal prosecutors, who are conducting a parallel inquiry. A spokesman for the U.S. Attorney’s office in New Mexico declined to comment.

Officials with the State Investment Council and educational pension fund declined to comment on Meyer’s statement.

The FBI has questioned New Mexico investment fund staff about Aldus, and a federal grand jury has subpoenaed documents from the State Investment Council and the state’s educational pension fund.

According to a subpoena released by the state retirement board, the grand jury sought a list of companies that Aldus had recommended for investment deals and documents related to third-party placement agents or brokers involved with pension fund investments.

Some placement agents implicated in the New York pension probe, such as Morris, also did business with New Mexico’s public investment and pension funds.

One New Mexico-based broker, Marc Correra, shared in nearly $22 million in fees for helping money management firms win investments with the council and the state’s educational pension fund from 2003 to 2008. That’s about half the fees paid to placement agents by firms that received state investment deals, according to state records.

Correra is the son of a political supporter New Mexico Gov. Bill Richardson. A New York-based lawyer for Correra, Ronald L. Rubin, declined to comment.

A spokesman for Richardson, Gilbert Gallegos, said in a statement, “The governor’s office is not aware of any activity outlined by the attorney general of New York. As we have previously explained, Gov. Richardson never spoke with Marc Correra about any state investments, and the governor never had any personal contact with Saul Meyer.”

Meyer entered his guilty plea Friday, but the proceeding remained under seal until Tuesday.

Meyer and Harding have now agreed to cooperate with the investigation, Cuomo said. The terms of Harding’s plea bargain would allow his charge to be reduced from a felony to a misdemeanor if he continues to assist the investigation.

Hevesi has not been charged in the case but was driven from office over an unrelated scandal involving the misuse of state drivers in 2006. Morris is awaiting trial, along with former New York pension fund official David Loglisci.

All three have denied wrongdoing. In their plea statements, both Meyer and Harding described numerous efforts by Morris and Loglisci to influence the pension fund investment process. They offered no indication, however, that Hevesi was involved.

Associated Press writer Barry Massey in Santa Fe, N.M., contributed to this report.